Since last update, SPX captured both its downside targets. Its second target zone was 2858-65, and yesterday's low was 2862.60. INDU likewise reached its green support line.
Near-term, some further support zones to watch if bears can force a breakdown:
And some additional targets for SPX if bears force a breakdown here:
This is a very interesting inflection zone for the market, because it's not impossible to count the decline from the ATH in SPX as an ABC, which could complete soon (or could even be complete at yesterday's low), but it would be more common for this to be a bear nest, in which case, SPX and INDU are only half-way to where they want to go.
Thus the aforementioned support zones could be very significant. If this is an ABC down, then it's done, the current zone (possibly very slightly lower) will hold, and the market could rally to new highs from here; if it's a bear nest, then it's only halfway to its first goal.
Also keep in mind the big picture potential bear count discussed a week ago. Keep in mind that a sustained breakdown would not yet guarantee that count would come to pass, but if there is a significant breakdown at support here, then it would most certainly remain on the table as an option -- an option that would take SPX down below its 2018 lows. First things first, though.
In conclusion, the next battle lines remain as drawn on Wednesday -- and we're now there. For reasons just discussed, this is an important inflection point for the market. Trade safe.
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